Gen Z and Millennials are becoming a powerful force in the economy. With inflation on the rise, they’re looking for new ways to plan, budget and save. While their appetite for fashion and recreation hasn’t waned, their desire to pay interest and fees has.

So, it’s little wonder that Buy Now Pay Later (BNPL) options like Afterpay (also known as Clearpay in the UK and Europe) are growing in popularity and why there are currently 19 million active Afterpay and Clearpay customers worldwide.¹ This presents an enormous opportunity for merchants looking to engage with increasingly savvy shoppers.

Grow your business with the fastest growing BNPL segment

In the US, Gen Z and Millennials currently account for 32%² of the total retail spend. By 2030, this is forecast to rise to 48%,² as more of Gen Z (currently aged 10 – 25) enter the workforce.

But it’s not just in the US that we’re seeing an increase. Across Australia & New Zealand (ANZ) and the United Kingdom, total retail spend by Gen Z and Millennials currently sits at 36%³ and 25%⁴ respectively. And much like the US, it’s forecast to grow to 48%³ (AUS) and 39%⁴ (UK) by 2030.

When you look at the percentage of Gen Z and Millennials that shop with Afterpay and Clearpay, these numbers aren’t surprising.

US: 68% shop with Afterpay.² 

ANZ: 66% shop with Afterpay.³

UK: 67% shop with Clearpay.⁴

While Gen Z shoppers in the US and ANZ may only account for 15%²,³ of spending on Afterpay, they represent the fastest growing cohort. Since January 2020, spending by Gen Z has increased by 618%² in the US and 39%³ YoY (to Dec ’21) in ANZ. It’s these customers that you want to get your business in front of!

Why BNPL spending is on the rise

There are a few reasons why the demand for BNPL is growing. Firstly, it’s convenient. It gives shoppers the flexibility to buy what they want now and pay for their purchase over time in interest free installments. And that’s particularly appealing for the younger generations who are shunning traditional payment methods like credit cards.

In the US, BNPL spending for Gen Z rose by 925%³ between January 2020 and November 2021. It was a similar story for Millennials, where spending increased 611%³ for the same period.

Once again, similar numbers were seen in ANZ and the UK, with Gen Z BNPL spending up 270%³ and 377%⁴ respectively and Millennial spending up 169%³ and 380%.⁴

Secondly, it’s transparent. Afterpay and Clearpay let customers see and manage their payments through their app or online. The sign-up process is easy, and customers get payment reminders to help them manage their budget and avoid any late payment fees.

Thirdly, it works like a budgeting tool. Between October 2021 and November 2021, BNPL sales grew by 29%4 as consumers used BNPL to manage and budget their purchases.

Gen Z and Millennials like to support small

Younger Americans and Brits are throwing their support behind small businesses. Almost two-thirds² of all BNPL spend on small businesses in the US came from Gen Z and Millennials, while this figure is as high as 70%⁴ in the UK.

Since January 2020, spending for small businesses has increased by:

UK: more than 1,500% for Gen Z and Millennials.⁴

US: 300% for Gen Z and 200% Millennials.²

With Black Friday/Cyber Monday on the horizon, now is the time to position yourself to take advantage of the growing demand for BNPL from the fastest growing consumer segments in the world.

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1. Q4'21 Public Metrics Summary

2. Millennials and Gen Z in the US: Next Gen Index, February 2022

3. Millennials and Gen Z in Australia: Next Gen Index, February 2022

4. Millennials and Gen Z in the UK: Next Gen Index, February 2022